Norfolk Southern reports third-quarter 2013 earnings

NORFOLK, Va., Oct. 23, 2013 /PRNewswire/ --

For 2013 vs. 2012

  • Railway operating revenues increased 5 percent to $2.8 billion.
  • Income from railway operations was $849 million, up 16 percent.
  • Net income increased 20 percent to $482 million.
  • Diluted earnings per share were $1.53, up 23 percent.
  • The railway operating ratio improved 3 percentage points to 69.9 percent.

Norfolk Southern (NYSE: NSC) reported third-quarter net income of $482 million, 20 percent higher than $402 million for the same period of 2012. Diluted earnings per share were $1.53, up 23 percent compared with $1.24 per diluted share in the third quarter last year.

"Norfolk Southern delivered strong results, led by growth in our chemicals, metals/construction, intermodal, and automotive businesses, combined with ongoing productivity improvements," said CEO Wick Moorman. "Even in the face of continuing weakness in the coal markets, our focus on service efficiency and velocity allowed us to provide superior performance for our customers and excellent results for our shareholders."

Railway operating revenues were $2.8 billion, 5 percent higher compared with third-quarter 2012, with shipment volumes increasing 4 percent.

For the third quarter, general merchandise revenues were $1.6 billion, 11 percent higher compared with the third quarter of 2012, primarily as a result of a 6 percent growth in shipments.

Coal revenues were $641 million, 9 percent lower compared with the third quarter last year, due to lower average revenue per unit and a 2 percent decline in volumes.

Intermodal revenues were $605 million, a 7 percent increase compared with third-quarter 2012. Volumes increased 5 percent due to continued domestic and international growth.

Railway operating expenses for the third quarter totaled $2.0 billion, 1 percent higher compared with the same period of 2012.

Income from railway operations for the third quarter was $849 million, 16 percent higher compared with the same period last year.

The railway operating ratio for the third quarter improved 3 percentage points to 69.9 percent compared with 72.9 percent in the same quarter last year.

Norfolk Southern Corporation is one of the nation's premier transportation companies. Its Norfolk Southern Railway Company subsidiary operates approximately 20,000 route miles in 22 states and the District of Columbia, serves every major container port in the eastern United States, and provides efficient connections to other rail carriers. Norfolk Southern operates the most extensive intermodal network in the East and is a major transporter of coal, automotive, and industrial products.


Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)



Third Quarter


First Nine Months


2013


2012


2013


2012


(in millions, except per share amounts)













Railway operating revenues












Coal

$

641


$

701


$

1,902


$

2,222

General merchandise


1,578



1,425



4,696



4,477

Intermodal


605



567



1,766



1,657

Total railway operating revenues


2,824



2,693



8,364



8,356













Railway operating expenses












Compensation and benefits


735



724



2,241



2,234

Purchased services and rents


420



403



1,223



1,186

Fuel


390



379



1,210



1,182

Depreciation


230



230



683



683

Materials and other


200



226



631



661

Total railway operating expenses


1,975



1,962



5,988



5,946













Income from railway operations


849



731



2,376



2,410













Other income – net (note 1)


30



33



194



93

Interest expense on debt


131



124



388



366













Income before income taxes


748



640



2,182



2,137













Provision for income taxes












Current


194



97



570



522

Deferred


72



141



215



279

Total income taxes


266



238



785



801













Net income

$

482


$

402


$

1,397


$

1,336













Earnings per share (notes 1 & 2)












Basic

$

1.55


$

1.26


$

4.45


$

4.12

Diluted


1.53



1.24



4.40



4.07













Weighted average shares outstanding (note 3)   












Basic


310.4



317.7



313.0



322.9

Diluted


313.9



321.8



316.6



327.4


See accompanying notes to consolidated financial statements.


 


Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)



Third Quarter


First Nine Months


2013


2012


2013


2012


($ in millions)













Net income

$

482


$

402


$

1,397


$

1,336

Other comprehensive income, before tax:












Pension and other postretirement benefits


38



33



110



97

Other comprehensive income (loss) of equity  

investees


-



-



2



(4)

Other comprehensive income, before tax


38



33



112



93

Income tax expense related to items of other   












comprehensive income


(15)



(13)



(43)



(38)

Other comprehensive income, net of tax


23



20



69



55













Total comprehensive income

$

505


$

422


$

1,466


$

1,391


See accompanying notes to consolidated financial statements.


 


Norfolk Southern Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)



September 30,


December 31,


2013


2012


($ in millions)

Assets








Current assets:








Cash and cash equivalents


$

984



$

653

Short-term investments



20




15

Accounts receivable - net



1,083




1,109

Materials and supplies



224




216

Deferred income taxes



149




167

Other current assets



34




82

Total current assets



2,494




2,242









Investments



2,395




2,300

Properties less accumulated depreciation of $10,271 and








$9,922, respectively



26,413




25,736

Other assets



63




64









Total assets


$

31,365



$

30,342









Liabilities and stockholders' equity








Current liabilities:








Accounts payable


$

1,267



$

1,362

Short-term debt



-




200

Income and other taxes



241




206

Other current liabilities



377




263

Current maturities of long-term debt



447




50

Total current liabilities



2,332




2,081









Long-term debt



8,499




8,432

Other liabilities



2,166




2,237

Deferred income taxes



8,074




7,832

Total liabilities



21,071




20,582









Stockholders' equity:








Common stock $1.00 per share par value, 1,350,000,000 shares  








authorized; outstanding 308,910,329 and 314,034,174 shares,








respectively, net of treasury shares



310




315

Additional paid-in capital



1,979




1,911

Accumulated other comprehensive loss



(1,040)




(1,109)

Retained income



9,045




8,643









Total stockholders' equity



10,294




9,760









Total liabilities and stockholders' equity


$

31,365



$

30,342


See accompanying notes to consolidated financial statements.


 


Norfolk Southern Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)



First Nine Months


2013


2012


($ in millions)

Cash flows from operating activities






Net income

$

1,397


$

1,336

Reconciliation of net income to net cash provided by operating activities:  






Depreciation


687



688

Deferred income taxes


215



279

Gains and losses on properties and investments (note 1)


(100)



(4)

Changes in assets and liabilities affecting operations:






Accounts receivable


26



(56)

Materials and supplies


(8)



(27)

Other current assets


48



43

Current liabilities other than debt


121



183

Other – net


18



34

Net cash provided by operating activities


2,404



2,476







Cash flows from investing activities






Property additions


(1,470)



(1,522)

Property sales and other transactions


109



47

Investments, including short-term


(29)



(14)

Investment sales and other transactions


21



37

Net cash used in investing activities


(1,369)



(1,452)







Cash flows from financing activities






Dividends


(476)



(467)

Common stock issued – net


92



77

Purchase and retirement of common stock (note 3)


(564)



(1,150)

Proceeds from borrowings – net


492



1,291

Debt repayments


(248)



(358)

Net cash used in financing activities


(704)



(607)







Net increase in cash and cash equivalents


331



417







Cash and cash equivalents






At beginning of period


653



276







At end of period

$

984


$

693







Supplemental disclosures of cash flow information






Cash paid during the period for:






Interest (net of amounts capitalized)

$

305


$

297

Income taxes (net of refunds)


485



536


See accompanying notes to consolidated financial statements.


 


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:


1. Other Income — Net    
          In first quarter 2013, we recognized a $97 million gain on a land sale, which increased net income by 
    $60 million or $0.19 per share.


2. Earnings Per Share
          For basic earnings per share, income available to common stockholders reflects reductions for the
    effect of dividend equivalent payments made to holders of stock options and restricted stock units as follows: 
    for the third quarter, $2 million in 2013 and $3 million in 2012; and for the first nine months, $5 million in 2013
    and $7 million in 2012.      
          For diluted earnings per share, income available to common stockholders reflects reductions for the
    effect of dividend equivalent payments made to holders of stock options and restricted stock units as follows: 
    for the third quarter, $1 million in both 2013 and 2012; and for the first nine months, $3 million in both 2013
    and 2012.


3. Stock Repurchase Program
          We repurchased and retired 7.5 million shares of common stock in the first nine months of 2013, at a cost
    of $564 million, and 16.5 million shares at a cost of $1.2 billion for the same period of 2012.  On August 1, 2012,
    our Board of Directors authorized the repurchase of up to an additional 50 million shares of common stock
    through December 31, 2017.  The timing and volume of purchases is guided by our assessment of market
    conditions and other pertinent factors.  Any near-term share repurchases are expected to be made with
    internally generated cash, cash on hand, or proceeds from borrowings.  Since the beginning of 2006, we
    have repurchased and retired 135.9 million shares at a total cost of $8.1 billion.


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SOURCE Norfolk Southern Corporation



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